Tom in is London this week, thinking about Gary P. Nunn, the Lost Gonzo Band and London Homesick Blues (special bonus points if you have heard Nunn or his group live). He takes a look  at some of this week’s top compliance and ethics stories which caught his eye, across the pond.

  1. Swedish court lets Telia execs walk free. Rick Messnick in the Global Anti-Corruption Blog.
  2. How bad are things at Tesla? New GC backs out after 2 months. Ryan Lovelace reports in com.
  3. In a stunning FCPA enforcement action, Cognizant Technologies obtains a declination. Matt Kelly is so stunned he has two blog posts on it, Lessons Learned and More Lessons. Tom and Mike Volkov are so stunned they have there first bonus podcast, on the the FCPA Compliance Report. Mike Volvok takes a deep dive in a four part blog post series on Corruption, Crime and Compliance: Part 1, Part 2, Part 3and Part 4.
  4. Former CEO and GC of Cognizant Technologies charged criminally under the FCPA. Sam Rubenfeld and Dave Michaels report in the WSJ Risk and Compliance Journal.
  5. What will be the impact of a Global Magnitsky Act. Kelly Swanson reports inGIR.
  6. Alison Taylor continues her run of great pieces, this one on the relationship of companies to suppliers to compliance. In the orgblog.
  7. GiGo is still relevant in AI. Heidi Maher explains in Corporate Compliance Insights.
  8. What are the basics of a Congressional investigation? Dan Portnov is back on com.
  9. How do you protect the attorney-client privilege and the 5thamendment will cooperating with the government? John F. Savarese and Carol Miller explore in NYU’s Compliance and Enforcement Blog.
  10. Danske Bank unceremoniously kicked out of Estonia, in com.
  11. Tom has a 5-part podcast series on ECI’s 2018 Global Business Ethics Survey. Check out the following: Part 1-The State of Ethics & Compliance in the Workplace; Part 2-Measuring the Impact of Ethics & Compliance Programs; Part 3– Building Companies Where Values and Ethical Conduct Matter; Part 4-Interpersonal Misconduct in the Workplace: What It Is, Where It Occurs and What You Should Do About It; Part 5-Final Reflections. The podcast is available on multiple sites: the FCPA Compliance Report, iTunes, JDSupra, Panoplyand YouTube. The Compliance Podcast Network is now also on Spotify. It is soon to be on Corporate Compliance Insights.
  12. Tom and Louis Sapirman are joined by Sean Freidlin for a Hanzo sponsored webinar on February 28 on the intersection of a corporate compliance program and corporate communications and marketing. Learn about knocking down silos and using social media in your compliance program. Registration and agenda are available here.

Tom Fox is the Compliance Evangelist and can be reached at tfox@tfoxlaw.com. Jay Rosen is       Mr. Monitor and can be reached at jrosen@affiliatedmonitors.com.

In this podcast series I have visited with Pat Harned, Chief Executive Officer (CEO) of Ethics and Compliance Initiative (ECI), about the firm’s 2018 Global Business and Ethics Survey (GBES). In this series we have considered each of the four GBES reports released by ECI . These included The State of Ethics & Compliance in the Workplace, released in Q1 2018; Measuring the Impact of Ethics & Compliance Programs, released in Q2; Building Companies Where Values and Ethical Conduct Matter, released in Q3 and Interpersonal Misconduct in the Workplace: What It Is, Where It Occurs and What You Should Do About It, released in Q4. In our final episode we conclude by tying them all together, considering what the findings mean for the compliance profession and where the profession may be heading down the road.

I began by asking Harned about where she thinks the regulators may be headed on compliance; both the prosecutors at the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). Harned noted that ECI is privileged to have opportunities to talk with the DOJ and other enforcement agencies about this very topic, both in this past year and in prior years. “First of all is increasing awareness by enforcement agencies regarding their influence on the behavior in our industry, but also with business leaders more broadly. They have a greater understanding that if they make an enforcement decision or declined to prosecute and they focus on one part of any effective compliance, it draws an immediate amount of attention. This has led them to think more broadly about not just to focus on certain program elements but on overall compliance program effectiveness.”

Harned believes we will continue to see the regulators advance the dialogue around compliance program effectiveness and she added, “one of the things that ECI has tried to do and will continue to do, is to also challenge the enforcement community to think encouraging higher quality programs.” While having a minimum standard program does make some difference, a company that really invests in a high-quality program receives much better results. To the extent that regulators help reinforce that message, they are helping to improve business behavior across all industries.

We next consider the evolution of compliance from a rules-based paper program to a more proactive approach to compliance. A rules-based approach comes “from creating boundaries and guidelines for employees based on things that have happened. You can never have enough rules to anticipate all of the challenges that are on the horizon.” This is why compliance has “evolved to a more proactive mindset and a proactive approach.” One of the manners in which an  organization can act “is to focus on having a set of core values that articulate not just how and where are the outer boundaries are but instead focuses on the way an organization wants to do business.”

Your company should focus on culture. This means institutional justice and institutional fairness. So are you creating an environment where people feel free to raise concerns? Will employees come forward and report wrongdoing? These are things help to help an organization to think more broadly about what the compliance and cultural challenges are ahead and does it have an environment where people will alert the company if there are things it needed to know about.

We concluded by exploring technology but not focusing the discussion on the new technological innovations that help to make the compliance practitioner more efficient, rather we explored the human side of compliance and the need, even with all of the explosion of tech we have seen in compliance, for the human element now.

Harned said that while Artificial Intelligence (AI) is one of the examples of new technologies available to the compliance practitioner; it is also “one of the primary examples of what happens when you remove the human element from ethical decisions.” This will be one of the challenges in front of compliance professionals and organizations. She pointed to the example of “self-driving cars. In this field there are decisions that have to be made by a machine, by a programmed entity about in certain circumstances of what may be the best of all bad options. In some of these bad options, there are risks to people’s wellbeing.” She asked the question, “How does that decision get made?”

For Harned, the “bottom line, is that ethics is about trying to treat people well and doing good by others.” Yet there may be an ethical decision which has to do with making a decision, where “the outcome of which affects other people and you’re trying to do good in the world as opposed to doing harm or doing the wrong thing.” This quandary brings up the human element of compliance. Harned concluded, “You’re never going to be able to come up with rules to anticipate all of the risks on the horizon or how people will behave in certain situations. You can also never program a machine or create software that can anticipate all the human elements of an ethics issue that.”

I hope you enjoyed this five-part series summarizing the 2018 ECI Global Business Ethics Survey. The information can help you benchmark your compliance program, business ethics and corporate culture. I look forward to reporting on the 2019 GBES. 

For more information on ECI, check out their website by clicking here.

To obtain a copy of all four of the 2018 GBES surveys, click here.

Welcome to the only roundtable podcast in compliance. In this week’s episode, the gang looks at some the issues that are on their collective minds. Shout outs and one rant follow after the commentators say their peace, in this Kudos to Dick Cassin edition.

  1. Mike Volkov talks about trade sanctions and how the current US-Venezuela imbroglio may play out for US companies. Mike shouts out to Dick Cassin who retired on February 1 as the Publisher and Editor of the FCPA Blog. We all agreed the entire compliance community owes a huge debt of gratitude to Dick.
  1. Jay Rosen talks about corporate culture and its increasing importance in the overall ethical health of an organization. Jay shouts out to his New England Patriots for their 6th Super Bowl win in the defeat of the LA Rams.
  1. Tom sits in for Jonathan Armstrong and expounds on what regime change means for the compliance professional. Tom shouts out to Frank Robinson, one of baseball’s greatest players and first African-American manager who recently died.
  1. Matt Kelly considers four recent SEC enforcement actions involving internal controls and how it may portend greater scrutiny in the FCPA realm of internal controls. Matt rants about company CEOs who do not tell anyone else their passwords before they have the temerity to die.

The members of the Everything Compliance panelist are:

  • Jay Rosen– Jay is Vice President, Business Development Corporate Monitoring at Affiliated Monitors. Rosen can be reached at JRosen@affiliatedmonitors.com
  • Mike Volkov– One of the top FCPA commentators and practitioners around and the Chief Executive Officer of The Volkov Law Group, LLC. Volkov can be reached at mvolkov@volkovlawgroup.com.
  • Matt Kelly– Founder and CEO of Radical Compliance. Kelly can be reached at mkelly@radicalcompliance.com
  • Jonathan Armstrong– Rounding out the panel is our UK colleague, who is an experienced lawyer with Cordery in London. Armstrong can be reached at armstrong@corderycompliance.com

The host and producer (and sometime panelist) of Everything Compliance is Tom Fox the Compliance Evangelist. Everything Compliance is a part of the Compliance Podcast Network.

FEBRUARY 22, 2019 BY TOM FOX

In today’s edition of Daily Compliance News:

  • The table comes to Zuckerberg. (BBC)
  • When is your value chain in jeopardy? (The Telegraph)
  • When is your supply chain in jeopardy? (UK Times)
  • Will Brexit damage your compliance program? (UK Times)

In this podcast series I visit with Pat Harned, the Chief Executive Officer (CEO) of Ethics and Compliance Initiative (ECI) about the firm’s 2018 Global Business and Ethics Survey (GBES). In this series we consider each of the four GBES reports released by ECI. These include The State of Ethics & Compliance in the Workplace, released in Q1 2018; Measuring the Impact of Ethics & Compliance Programs, released in Q2; Building Companies Where Values and Ethical Conduct Matter, released in Q3 and Interpersonal Misconduct in the Workplace: What It Is, Where It Occurs and What You Should Do About It, released in Q4. We discuss each report in a separate podcast and then in Part V, tie them all together. Today, in Part 4, we consider the survey Interpersonal Misconduct in the Workplace: What It Is, Where It Occurs and What You Should Do About It.

A decade ago, companies made headlines for problems such as bribery, financial manipulation, and fraud. The attention has shifted, though. For the past year, mistreatment of employees, especially abusive behavior, sexual harassment and discrimination, has joined data privacy as a critical issue of our time. #MeTooand #TimesUphave given a name to the larger effort to unearth problems that have festered and to find a path towards safer more respectful workplaces. Efforts to expose the issues have uncovered repetitive patterns of interpersonal misconduct in organizations around the world.

This topics of sexual harassment, sexual assault discrimination and/or abusive behavior has been a part of the compliance conversation, just as in society for at least the last two years. GBES is designed to measure trends in workplace misconduct. Unfortunately, one of the leading types of misconduct that people observe is always abusive and intimidating behavior by supervisors towards their employees. The Q4 survey was designed to explore that issue a more. ECI also wanted to take the pulse around sexual harassment and discrimination in the workplace.

Harned said the survey found, “12% of people observed some type of abusive behavior in the workplace and another 12% observed some type of sexual harassment. Even worse was the finding that 21% observed abusive or intimidating behavior and that most were not isolated incidents, with 62% happening on multiple occasions.

One of the most important things about #MeToohas been to raise the awareness that these problems are not simply the responsibility of those harassed, discriminated against or abused. It is the responsibility of someone who sees such conduct to report it. I was therefore interested in what the survey showed on this issue. Harned said, “There are certainly a few risk factors that I think drive a fair amount of people’s decisions when they are observing these types of behaviors, whether or not they’ll come forward and actually report it.

The first is their perception of leaders, whether or not this is something that we’ve sort of seen over the years, that people’s beliefs about their leaders, the conduct that they display, but also their belief about whether leadership really cares about this issue also affects their willingness to come forward.”

The second factor is the focus of the environment of the business, which focused on processes versus outcomes. Harned said, “One of the things that we found was that when an organization focuses on performance and the way they incentivize people; it has a substantial influence on the extent to which they’re observing” untoward behaviors; whether it be abusive behavior, sexual harassment or discrimination in that environment. The survey found that if you have a focus on the overall outcomes as the bottom line, there is usually not an environment of accountability. As Harned stated, “it’s a real problem for a lot of organizations.”

The third factor is the extent to which the organization is going through a fair amount of transition and change. These three items “drive employees decisions about whether they will come forward to report, whether they’ll take action when they’re seeing this kind of behavior in their environment. We have seen this to be a trend with other types of misconduct as well, that there are certain types of shifts that happen in an organization where misconduct is likely to be higher, for example, that would include expansion into new countries, mergers, acquisitions of another organization.” Yet, it can include other events which are familiar in the life of a corporation including  “substantial changes in top management, changes in leadership, layoffs, restructuring, downsizing, and any measures that companies take to cut costs.”

The survey found that employees are “3.8 times more likely to observe discrimination if their organization is going through transition and they are 3.5 times more likely to observe sexual harassment. Finally, organizations going through such transitions are 2.5 times more likely to observe abusive behavior.” Harned concluded, “There’s something about organizations in transition that changed the way people relate to each other or it. Unfortunately, it allows this sort of behavior that goes over the line to take place if heightened awareness.”

The bottom line is that heightened awareness of interpersonal misconduct and the toll it takes on individual employees and organizations is a positive development. But more needs to be known about the nature of the issues, the scope of problems, the factors that exacerbate problems and strategies for fostering respectful workplaces.

Join us tomorrow when we conclude our series by considering the scope of what these four GBES components mean for companies, the compliance professional and the compliance profession. 

For more information on ECI, check out their website by clicking here.

To obtain a copy of all four of the 2018 GBES surveys, click here.